President and CEO of Pan Caribbean Financial Services, Donovan Perkins, says double digit growth a constant target. - File

Pan Caribbean's net income grew 22 per cent to $271 million for its September 30 quarter over the comparable quarter a year ago, giving earnings per share of 50 cents.

Despite a very competitive environment with the industry experiencing shrinking interest margins, the diversified financial services company also saw its critical net interest income grow 12 per cent, due to the expansion of its investments and loan portfolio. Net operating income also rose 24 per cent to $566 million for the third quarter on the back of Pan Caribbean's other revenue generators-trading and fee income.

Asset management fees

For the full nine month period, however, net earnings of $813 million were 1.0 per cent below the $820 million in the comparable period last year.

Pan Caribbean's Senior Vice-President Capital Markets, Philip Armstrong, said the environment has had its challenges, with asset management fees trailing budget because of the shrinking stock market that has prevailed for most of the year.

"The JSE Index bottomed out at around 76,000 in August and has recovered nicely since then. Sigma Optima had a great quarter and investors who saw the rally coming and have benefited from our well-positioned portfolio," said Armstrong.

He went on to say, however, that the group's capital markets division has had to dig deep to identify trading opportunities.

GROWTH relatively slow

Pan Caribbean's consolidated balance sheet has grown by $4.5 billion since its year-end which seems relatively slow compared to some of its competitors and loan growth has been sluggish.

In its filing to the JSE, the company's directors noted that while lending remains a priority, the group would continue to focus on credit quality.

Non-performing loans remain insignificant at 0.4 per cent of the total portfolio and have declined to 3.3 per cent of the credit portfolio as opposed to 3.7 per cent in December 2005, which is well within industry standards, and fully provided for.

With shareholders equity of $6.9 billion, Pan Caribbean's capital to assets ratio was 15 per cent, suggesting that the company could grow its assets at a much faster pace.

Overall, its year-to-date core earnings from continuing operations when compared to 2005 (excluding gains and income totalling $30 million from discontinued operations) have grown three per cent to $813 million in 2006.

In his comment on Pan Caribbean's likely performance for the full year, CEO Donovan Perkins restated an earlier release to the Stock Exchange.

"We expect to exceed last year's performance. This year has been a balance between achieving growth and internally focused projects. We continue to invest in our people, in our systems and are constantly planting seeds that will bear fruit in the future," he said.

Next year, key initiatives for Pan Caribbean that are expected to contribute to profits include the formal launch of its stockbrokerage business and the official introduction of Sigma Liberty, its US dollar-indexed fund, and its commercial banking initiative.

Perkins was optimistic about the economy with interest rates headed lower and prospects for stronger GDP growth.

"After two negative years, the stock market should be up in 2007," he said.

Asked about Pan Caribbean's growth prospects, he responded, "Our chairman (Richard Byles) gets excited about double digit growth, and that is a constant target."

keithcollister@cwjamaica.com